US economy improving post-election
The US economy is in a period of improvement which had started before the recent Presidential elections, but is continuing under the government of Donald Trump, according to Principal Global Investors.
Business and consumer confidence has risen notably across the United States in the wake of Donald Trump’s inauguration in late January, but Principal Global Investors’ chief global economist, Bob Baur, said that the performance of the American economy had been on the rise for several months beforehand.
“As worries about a deflationary collapse fade away, nominal growth is picking up and recession fears are receding. U.S. nominal growth was two per cent a few quarters ago; now it’s four per cent to five per cent,” Baur said.
“Average hourly earnings have been rising on a smoothed basis about 2.7 per cent annualised, the best growth of the expansion. We expect wage growth to hit three per cent to 3.5 per cent yet this year.”
Baur said optimism around jobs and wages had been the catalyst for the increase in consumer spending across the US in late 2016.
“Job openings are very high and the number of unemployed per job opening is at the low for the expansion and as low as any time in the 2000s,” he said.
“Even the Fed has become more optimistic about the U.S. economy and is on a slow path to normalise monetary policy.
“The rise in long-term rates since last July may contrarily be a positive for consumer spending.”
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